Con-way Freight today said it will boost truck driver pay by $60 million in 2015, restructuring pay rates for more than 14,000 line-haul and pickup-and-delivery drivers nationwide. The second-largest U.S. less-than-truckload carrier said it will raise pay, align rates with geographic markets and reduce the time it takes for drivers to reach the top pay scale.

The new pay plan at Con-way Freight comes as trucking companies of all types are pulling out all the stops to recruit truck drivers, including the promise substantial pay increases.

“Our LTL company, along with Con-way Truckload, is facing the most pronounced driver shortage we’ve ever seen,” Douglas W. Stotlar, president and CEO of parent company Con-way, said in a statement. Con-way Truckload increased driver compensation last month.

“The overall amount and timing of the increase are designed to improve Con-way Freight’s ability to attract and retain professional drivers in the context of a critical industrywide driver shortage,” Con-way Freight said in a U.S. Securities and Exchange Commission filing.

Starting Jan. 4, all locations will be aligned to a common schedule in which drivers will reach top scale at three years from their date of hire, the Ann Arbor, Michigan, company said.

Con-way Freight estimated the wage increase would cost the company $60 million in 2015. “In recent years, the comparable year-over-year impact of an annual driver wage increase has been about half of this amount,” the company said in its SEC filing. The shortage of experienced truck drivers is one factor behind the increased costs, Con-way said.

The LTL pay increase has been in the works for years, the company said, as Con-way Freight implemented “phased changes” to its compensation program to reflect evolving market conditions and ensure the non-union carrier remained competitive in driver pay.

The additional $60 million in compensation equates to about a 6 percent pay increase for Con-way Freight drivers, according to SJ Consulting Group.

The new pay structure is the last step in a transition away from multiple legacy pay plans left over from the days before the national LTL carrier was created by the merger of three separate regional carriers, Greg Lehmkuhl, president of Con-way Freight, said in a statement.

“Our simplified pay structure enables us to more effectively align driver pay with the market-based cost of labor, and provides increased flexibility to react to market conditions over time so we can ensure our drivers’ compensation remains competitive,” he said.

Con-way Freight also is facing an organizing campaign led by the Teamsters union. On Sept. 12, 113 Con-way Freight drivers and dockworkers in Laredo, Texas, voted to join the Teamsters — making Laredo the only unionized facility among Con-way’s 300 terminals. The Teamsters are calling for elections at three Southern California terminals as well.

Other LTL carriers won’t necessarily change lanes and raise pay in reaction to Con-way’s announcement. For one, YRC Freight, UPS Freight and ABF Freight are union carriers, with contracts in place covering wage increases. “Old Dominion and Saia are already planning on giving normal annual wage increases and do not seem to have any ‘catch-up’ increases to make,” David G. Ross, a managing director at Stifel, said in a Sept. 30 note to investors.

“Truckload carriers should continue to see much more significant driver pay pressure, in our opinion, than the LTL market, as absolute wage levels are significantly lower,” Ross said.

Con-way Freight is far from the bottom pay rank in the LTL industry. The company ranks third in terms of hourly pickup and delivery driver pay, following Old Dominion Freight Line and industry pay leader UPS Freight, according to SJ Consulting Group data.

Is this the start of movement to organize in freight and trucking? We hope so! It’s certainly a good first step, and it should spread. But there are serious challenges.

FedEx and Con-way are national trucking outfits and corporate giants. They will have nationally coordinated efforts to resist and discourage organizing—including trying to retaliate against terminals that vote for the union.

The IBT has to be fully prepared to support local union efforts. When Columbus Local 413 and other locals started organizing at Conway in 2011-12, the International dropped the ball.

This time around, as locals take the initiative, the IBT organizing department needs to be on call with ready resources and personnel. No local union’s resources can compare to the International Union. Local unions and freight workers are stepping up to take action. The IBT needs to get behind this movement and help drive it to victory.

“It’s great that we’re finally making some gains in organizing FedEx Freight and Con-way. It’s a long time coming. But if we’re going to win on a wide scale, we need to shore up Teamster pride in freight. That starts with much better contract enforcement.”

September 24, 2014: YRC drivers are fed-up with pictures like this. It’s time to go beyond complaining and challenge subcontracting.

There is language in the YRC MOU that offers protections, if it is utilized and enforced. It’s time to do just that.

Here is some of the language that exists in the MOU:

“The maximum amount of over-the-road purchased transportation shall be limited to 6% (starting with Calendar Year 2014) of YRC Freight’s total miles...”

“The use of PTS under this section 7(e) is for direct, closed-door service from distribution center to distribution center only...”

“At those locations where PTS is utilized, YRC Freight shall provide protection for all active bid road drivers during each dispatch day the PTS service is used and all active extra board road drivers during each dispatch week that PTS service is used.”

“The protection for boards at intermediate relay locations will be weekly earnings, calculated using the four (4) week average method. As an example, if PTS is dispatched from Kansas City destined for Atlanta, the board at the intermediate relay in Nashville will have earnings protected that week.”

“YRC shall report in writing on a monthly basis to each Local Union affected and to the Freight Division, the number of trailers tendered to any purchased transportation provider. YRC Freight also shall report the carrier’s name (including DOT number), origin, destination, trailer/load number, trailer weight and the time the trailer/load leaves YRC Freight's yard. In addition, YRC Freight shall, on a quarterly basis, unless otherwise required, send to the office of the National Freight Director a report containing all of the above indicated information in addition to the total number of miles YRC Freight utilized with purchased transportation, inclusive of the type of PTS utilized, including whether the purpose was for avoiding empty miles, overflow or one-time business opportunities such as product launches.”

“...each time YRC Freight uses purchased transportation providers to run over the top of linehaul domicile terminal locations and/or relay domiciles, said dispatches shall be counted as supplemental or replacement runs, as applicable, for purposes of calculating the requirement to add new employees to the road board. The formula for recalling or adding employees to the affected road board shall be thirty (30) supplemental runs in a sixty (60) day period.”

If local unions and the International enforce this language, it will be clear that YRC is committing violations, and we will gain additional work and additional Teamster jobs. This means consistently filing grievances, networking stewards from terminal to terminal, and demanding real enforcement from the grievance panels and the Freight Division.

September 13, 2014: Yesterday the Laredo Texas Con-way terminal workers voted to join Teamsters Local 657, in a first-ever organizing win at the giant LTL carrier. Los Angeles Joint Council 42 just filed with the NLRB for organizing votes at three Con-way terminals in Los Angeles, Santa Fe Springs and San Fernando.

Is this the start of movement to organize in freight and trucking? We hope so! It’s certainly a good first step, and should spread.

Other locals are organizing at Con-way, and also among FedEx Freight workers. A conference call of locals was held two weeks ago and other one is coming up soon, to compare notes on freight organizing.

The Laredo vote among 113 drivers and dock workers at the busy terminal on the international border was 55-49 for Local 657. Los Angeles Local 63 and other locals in the initial stages of freight organizing have also taken local initiative.

The International union organizing department has so far not been involved. Freight and trucking have not been priority areas for the Hoffa administration. In fact, the Hoffa administration poured cold water on a drive at Con-way in Ohio, begun by local unions over a year ago.

Locals are taking initiative. The International union has the big resources to help coordinate this movement and drive it to victory.

In my many years covering trucking, I’ve been surprised by the industry’s steadfastly antagonistic approach to government attempts to impose new regulations and requirements to improve safety. By and large, fleets seem to look upon safety regulations as a burden to be resisted when possible and to be grudgingly endured only when active political resistance fails.

While I accept that most fleets strive to reduce accidents and injuries—which executives understand will keep damage claims and customer complaints down -- carrier officials seem to lead with their chins. In fact, short-term savings gained by delaying safety improvements are quite costly to the industry in terms of the public’s perception of trucking and are often harmful to the financial performance of fleets.

Comments on the proposed electronic logging device mandate cover the full spectrum of reactions, from outrage and disdain at Big Brother government to applause for a sensible and long-overdue safety rule.

Most of the 2,213 comments are from individuals who do not like what the Federal Motor Carrier Safety Administration is planning to do. Many include substantive suggestions for how to improve what the agency is proposing.

Higher driving costs and falling pay have created a truck-driver shortage that's likely to worsen in the coming years.

The American Trucking Associations (ATA) estimates the U.S. is short 30,000 truck drivers — a number expected to surge to 239,000 by 2022.

In July 2013, new federal hours-of-service rules went into effect.

The key provision was a limit to the use of a 34-hour "restart." Drivers have a 70-hour-a-week cap on how much time they can be on the road. Previously, they'd been able to artificially reset that cap to zero if they took 34 consecutive hours off. Now, many are unable to do so.

"Smaller 'owner/operator' firms are increasingly dropping by the wayside as the cost of operations and maintenance are simply becoming too expensive to stay in business," Paul Pittman, a planner at a North Carolina-based logisitcs company, told Business Insider by email.

So drivers are suddenly faced with the choice of leaving the profession entirely or moving to a larger company where wages are likely to be lower.

"As controls continue to tighten, many of the existing drivers currently employed are turning to other areas of employment simply to get off the road and escape some of the regulations implemented to govern their operations," Pittman said.

To hang on, small operators are forced to cut corners. For Jeff, a driver who asked to be identified by only his first name, the pay isn't the biggest issue — it's the compromises some firms are making on driver compliance.

"With how my lifestyle is [the pay is] pretty decent. I don’t go out and blow money on speed boats, or the best electronics, or hookers and blow," Jeff said. "I’m married and I have four children. We prioritize our finances. Two years ago we finally bought an HDTV. My main issue is the safety aspect."

Violating Rules

His primary issue with trucking companies is the pressure they put on drivers to violate federal rules. Jeff worked for a small outfit in the Midwest. The owner of that company, he says, wanted him to take a dry van load from Hubbard, Ohio, to Syracuse, New York, which is about 327 miles.

Jeff explained that this trip takes longer for trucks than it does for cars, because trucks carry heavier loads, and it takes longer for them to speed up and slow down. It would take a truck about five hours and 15 minutes from Hubbard to Syracuse.

The owner, whom Jeff didn't want named, asked him to drive back to Hubbard empty, do a drop-and-hook (drop one trailer, hook another) and take another trailer up to Binghamton, New York, the same day. And the trip from Hubbard to Binghamton is about five and a half hours, meaning a round trip would only leave him about 30 minutes of driving for the day and legally Jeff couldn't.

"When you're non-compliant as a driver you run the risk of fatigue and the risk of hurting other people," he said. "And as a driver it's my license on the line." Jeff said he was asked by multiple trucking companies to falsify his logs, but he refused to.

"I consider myself a safety-oriented driver, and I have found that is a bad thing," Jeff said. "Because since I got my CDL [commercial driver's license] in 2008, I have worked for about 10 different trucking companies. That doesn't look good because it looks like it is job hopping ... I'm sticking to my guns."

Time Away From Home

Another problem is lack of time spent at home. Todd Feucht of Wisconsin says drivers can expect to spend as little as 52 days at home a year. Feucht, who hauls oversize loads, averages about three to five weeks. Last year he was home 54 days, including his vacation days. "Back in the day you were treated like a knight, but now you're treated like a peon," Feucht says.

All of this helps explain why the turnover rate at large truckload carriers was 92% annualized in Q1, according to the ATA. Turnover refers to the rate at which drivers leave the industry and are replaced.

"One-hundred percent turnover doesn’t mean that every driver left," ATA chief economist Bob Costello says. "If you keep a driver for 90 days, the rate generally drops in half. However, there are a group of drivers that churn, and they generally stay at a carrier for a short length of time (just weeks or a couple of months). Many drivers stay with a carrier for years."

Getting Squeezed

Meanwhile, drivers with less experience or bargaining power get squeezed. Feucht has been driving trucks for 20 years and thinks trucking companies need to be more honest when recruiting.

The new drivers are "greener than grass," he said. Those who attempt to lease trucks quickly discover the significant cost of maintenance and overhead. Young drivers who go this route end up having very little to show for it.

"I meet these guys at truck-stops and they can barely afford to eat ramen during the week," Feucht told Business Insider. "They're dropping $850 on a truck a week."

Truck drivers typically get paid hourly or by the mile. Some get a percentage of the load. If you're getting less than 33 cents a mile "you're getting ripped off," Jeff, a 36-year old truck driver from Ohio, told Business Insider.

The truck drivers suggest if these companies want to see this turnover decrease they need to focus on improving pay, improving training for new entrants, and they need to not push them to violate federal regulations.

There may finally be some movement on this front. Last month, Swift, one of the largest haulers in the U.S., announced it would refocus expenditures on better labor conditions for employees, including higher wages.

"After assessing the current and expected environment, we believe the best investment we can make at this time, for all of our stakeholders, is in our drivers," the firm said in its earnings release. "Our goal is to clear the path for our drivers by helping them overcome challenges, eliminate wait times and take home more money."

August 15, 2014: The Central States Pension Fund has given YRCW an extension until 2019 to repay $109 million that YRC owes the pension fund. This was revealed in a filing with the Securities and Exchange Commission and in the 2014 First Quarter Report filed by the Independent Special Counsel on July 30.

That report, along with the Financial and Analytical Report obtained by TDU, indicates that the fund’s assets fell from $18.7 billion to $18.5 billion during the first quarter.

YRC has owed the $109 million to the fund since 2009, when it failed to make required payments, and has twice extended the deadline for making a balloon payment. The latest extension came by vote of the Central States union and management trustees in January, 2014. The trustees are reluctant to strain YRC’s weak finances. YRC makes interest payments of $550,000 per month.

While $109 million is small compared to the fund’s assets, it is still a very significant debt obligation to the troubled fund, as some YRC Teamsters and Central States retirees have already noted.

Central States lost $209 million in assets in the first quarter because the investment return of 1.7% could not keep up with pension payments.

Meanwhile, the Central States Health and Welfare Fund continues to run in the black and build up its outsized reserves. As its number of Teamster participants has more than doubled, with the addition of UPS part-time and full-time members, future reports will bear watching closely. Many UPS Teamsters recently put into the Central States Fund (TeamCare) are finding that certain benefits are falling short of promises made by the Hoffa-Hall administration.

In a decision issued August 11, 2014, the Occupational Safety and Health Administration (“OSHA”) has found that truck owner Terry Unrein fired truck driver Rebecca Barnhard for refusing to drive a truck with a defective steer tire and for complaining that a headlight on the truck operated only intermittently. Unrein owned and operated five trucks, and transported goods under contract with Gulick Trucking.

OSHA ordered Unrein to reinstate Ms. Barnhard to her former position as a truck driver, to pay her back pay, and to pay her attorney fees. OSHA also ordered Unrein to post a copy of a notice at its work place indicating that Ms. Barnard had won her case, and that the Surface Transportation Assistance Act protects drivers from retaliation for making complaints about violations of commercial vehicle safety regulations, and for refusing to drive in violation of a commercial vehicle safety regulation.

Ms. Barnhard states, “I am delighted with OSHA’s decision and feel that my decision to refuse to drive an unsafe truck has been vindicated. My employer wanted me to take shortcuts to sidestep DOT regulations and I am happy that the law protected me when I refused to take shortcuts with safety.”

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